Red Tape and Share Buy-Backs in Carl Icahn’s Sights

Now that Donald Trump has been elected, the billionaire activist investor is confident CEOs will have a greater say in how their businesses are run. And that will ultimately mean less regulation.

“It’s important, extremely important, for this country that this absurd regulatory environment is toned down somewhat,” Icahn told CNBC.

A Trump backer during the election campaign, Icahn was, this week, chosen as a key advisor on regulatory reform to the president-elect. He singled out banking and environmental regulation, particularly of the oil-refining industry, as focal points.

Trump’s transition team already has pledged to “dismantle” the Dodd-Frank Act, a body of rules created to curb risk taking in the aftermath of the financial crisis regularly criticized by banking CEOs as overly burdensome.

“The advice is coming—and I don’t demean these people—but from 25-year-old kids who have this outsize say in what is going on.

To be sure, some bankers such as Goldman Sachs CEO Lloyd Blankfien and JPMorgan Chase CEO Jamie Dimon have acknowledged that parts of the regulations, such as forcing banks to increase their emergency capital buffers, had made the banking system more stable.

Icahn said it was important to allow CEOs such as Dimon and Bank of America’s Brian Moynihan to have their say—something he claimed they haven’t been able to do freely with the Obama administration.

“That’s the problem with this whole administration for the last eight years. The advice is coming—and I don’t demean these people—but from 25-year-old kids who have this outsize say in what is going on,” he said. “And the amazing thing in a lot of these agencies is the people at the top of them are not experts in those areas.”

CEOs, however, shouldn’t necessarily expect an easy run when Trump is sworn in next month.

Icahn also told CNBC that some business leaders should be fired for how they manage their company’s capital. Share buy-backs, in particular, ought to be discouraged in instances where balance sheets are weak, he said.

“A lot of companies borrow money or have too much debt on the balance sheet and yet use that money that they get to buy back stock instead of investing in their own company,” he said. “And that in some way should be controlled.”

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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